Virginia state income tax: interest from other states

[gjcoram]

Hi-

I noticed a difference between last year's and this year's Virginia state taxes; it has to do with "Interest on obligations of other states, exempt from federal income tax but not from state tax"

I found that I had incorrectly entered the info from my 1099DIV, claiming that all the interest income from line 13 was from Virginia. I went back to the income section and corrected this, but TurboTax did not recompute my VA tax. It still shows 0 for this adjustment.

Do I have to delete my VA tax return and start over?

[baldietax · Accepted solution]

there is an issue if you switch the option for the state breakdown from "I earned exempt-interest dividends in only one state." to "I earned exempt-interest dividends in more than one state."- at least in Desktop - TT will fail to recognize the state taxable amount which sounds like the issue you are having.

If you are on desktop, in Forms mode, bring up the 1099-DIV worksheet.  At the very end of Box 12 there is a line "State where the dividends were earned.  Postal code (such as "CA" or "NY") and if this is set to VA, change it to XX and you should see the VA return get corrected; see example below.

For the state breakdown don't forget US territories (Puerto Rico etc) which are exempt in VA also.

Not sure if this issue also exists with TT Online.

errorfixed

[MarilynG1]

If TurboTax didn't recompute your Virginia return after making an adjusting 1099-Div entry in your Federal return, go to the "State Taxes" tab, select "Edit" next to Virginia, and walk through the state interview again to force a recalculation.

@gjcoram 

[gjcoram]

baldietax - Bingo! That fixed the problem. Thanks.

[gjcoram]

MarilynG1 - I had gone through the steps, and "revisited" income, but that didn't help. The suggestion from baldietax to switch to Forms mode did fix it.